ABSTRACT.
This article seeks to discuss one of the most crucial aspects of English Common Law as well as that of Ugandan Contract Law. The Doctrine Of Consideration in both English and Ugandan contract Law limits the enforceability of agreements not supported by consideration or at least it sets out to limit such agreements. This article will discuss the doctrine in general and also set out to answer some of the most controversial questions as far as the Doctrine Of Consideration is concerned.
INTRODUCTION.
There is a popular adage that says, “There are no free lunches in the world.”, That means that it is not possible to get something that is desired or valuable without having to pay for it in some way.
It is certainly what Lebron James meant when he said, “ Nothing is given, everything is earned.”, These phrases are what perhaps explain the Doctrine Of Consideration, quite simply put, it is something for something. This brings out the idea of reciprocity as the distinguishing mark, it is the gratuitous promise that is unenforceable in English law.[1]
The Contracts Act[2]reproduces the definition of valuable consideration expounded by Lush J. in Currie v Misa[3] where he defined valuable consideration to mean and I quote,
“…Some right, interest, profit, or benefit accruing to the one party, or some forbearance, detriment, loss, or responsibility, given, suffered, or undertaken by the other...”
Consideration is the doctrine designed to establish which promises should be legally enforceable.[4]The purpose of consideration as stated by Sir Guenter Treitel in his book The Law of Contract is to put certain limits or to limit the enforceability of agreements even when they are intended to be legally binding[5]
Drawing Lessons From Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1
To the above put this into perspective, we need to address ourselves back to the matter in which, the plaintiff bought a medical preparation called ‘The Carbolic Smoke Ball’ on the basis that the defendants advertised that they would pay £100 to any person who contracted influenza after using the smoke ball in the prescribed manner and for a specified period. Further, the defendants stated that, ‘to show their sincerity’ they had deposited £1,000 with the Alliance Bank. (which I classify as consideration).
The plaintiff bought one of the smoke balls and used it in the manner prescribed and promptly caught influenza! She sued for the £100. The defendants contended that there was no agreement between them and used considerable ingenuity in promoting this contention, the argument of the Smoke Ball company was that there was no intention to create legal relations or be it as it may be legally bound, for basic understanding, if the company did not provide any consideration for what later turned into an offer or a promise that is, then there would have been no legally enforceable contract and Mrs Carlil’s claim would have failed but the Smoke Ball Company provided consideration for their offer which Mrs Carlil acted upon and therefore had contractual relations with the Smoke Ball Company even though they claimed the lack or absence of intention to create legal relations.
The Point here is simple, that the intention of the parties, though crucial in itself as an element of a contract, would not create legal relations unless there is valuable consideration.
The view that agreements were binding without consideration merely because they were in writing was rejected in England a long time ago as seen in the matter of Rann v Hughes[6] because the popular view had it that consideration was merely evidence of intention to be legally bound and that putting it in writing was sufficient evidence which replaced the need for consideration. [7] But this notion was rejected altogether. Are agreements without consideration necessarily unenforceable? This article seeks to answer just that and it will be addressed later on.
Professor Ben Kiromba suggests that the definition of what consideration is connotes and therefore means that
"Consideration is the price for which a promise is bought or received.[8]
This implies a sort of bargaining involved for there to be a valuable consideration.
This is important if we are to look at the development of the doctrine of Consideration.
One theory is that it evolved as a means of restricting the development of assumpsit, in that only promises supported by consideration could be enforced, gratuitous promises were, therefore, not enforceable. The law thus evolved in simple contracts in such a way as to enforce bargains rather than promises which include those based on natural love and affection.
What is wrong with the definition of Consideration in Currie v. Misa?
To answer this, let us look at contracts purely based on promises or be it as it may where the consideration is itself executory. For instance, If Katumba promises to buy a phone from Mayanja for 900k and Mayanja on his part promises to sell said phone to Katumba for 900k, there is clearly an enforceable agreement or contract should one of them fail to perform. But there is clearly no detriment or benefit undertaken by either party until the date for performance of the contract arrives, the consideration within the contract presenting itself via the exchange of promises made by the parties. In this particular way of reasoning therefore, the definition is meaningless.
In my understanding therefore, it is preferable to think in terms of consideration amounting to Katumba buying Mayanja’s promise by performing some act in return for it.
Certainly, Sir Frederick Pollock[9] defines consideration as and I quote,
“An act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable.”
This definition was approved by the House of Lords in Dunlop Pneumatic Tyre Co. Ltd v Selfridge and Co. Ltd[10] and is regarded as being more representative of the doctrine of consideration in modern commercial contracts. The Contract's Act also reproduces a similar definition in what it terms as consideration for a promise.[11]
Principles governing the doctrine of Consideration.
When it comes to the doctrine of consideration it is perhaps erroneous to think of it as a singular and isolated concept. The doctrine of consideration is in itself an embodiment of rules, principles, and rules that make up the exact law we know today, so we should make no mistake in viewing it as a simple, singular and isolated concept because there is much more to it.
Some of the principles governing or that have come to make up the doctrine of consideration include;
1. Consideration may be executed or executory but not past
2. Consideration must move from the promisee
Consideration may be executed or executory but not past
Looking at past consideration, the argument is thus that the consideration for a promise must be given in return for the particular promise.
Think of it this way, Namuddu gives Kiconco a bike, and 3 years later Kiconco feeling a sense of appreciation, promises to pay Namuddu 1.5M. Will there be a consideration for Kiconco’s promise? NO!
The reasoning here is quite simple to grasp, Namuddu did not give Kiconco the bike in return for her promise of 1.5M, This thought is basically applicable where there has been a time interval between an act and the promise said to have been given in return for said act.
This type of consideration is said to be past and therefore not valid and the court in Dent v Bennett[14] seems to agree with this reasoning.
Take this question, if Nsereko hires a plumber under a contract of service and promises to pay said plumber 200k, but after the job is completed and the contract therefore terminated and or discharged after performance, Nsereko is, after say 2 months amazed by the work done by the plumber and promises the plumber an extra 100k for appreciation of work done, is that valid consideration? Or will that promise be contractually binding?
In the meaning of the decisions in Simpson v. John Reynolds [15] and Murray v. Goodhews [16] it would be past consideration and therefore not legally binding.
The only instance where Nsereko’s promise would be contractually binding is when the plumber, other than past service, provides consideration which will include his promising to complete some other act for Nsereko.
The question of whether consideration is past is one of fact and the wording of the agreement is not decisive thus in Re McArdle [17] a promise made "in consideration of your carrying out" certain work was held to be gratuitous as the work had already been done.
The rule in law is that past consideration is no consideration.[16]
But perhaps as the phrase goes, in Law, every General rule has an exception and the exception to past consideration is served up by the wonderful decision of Lampleigh v Braithwait.19
The facts of this case were that Braithwait had killed another man and asked Lampleigh to secure a pardon from the king. Lampleigh went to considerable effort and expense to secure the pardon for Braithwait who subsequently promised to pay Lampleigh £100 for his trouble.(after he had secured the pardon). Braithwait then failed to pay the £100 and was sued on his promise by Lampleigh.
Clearly on the basis of the rule relating to past consideration, the efforts of Lampleigh were in the past in relation to the promise to pay by Braithwait and therefore he should have failed in his action.
The court, however, held that the original request by Braithwait in fact contained an implied promise that he would reward and reimburse Lampleigh for his efforts. Thus the previous request and the subsequent promise were part of the same transaction and as such were enforceable against Braithwait by Lampleigh once he had secured the pardon for him.
It is keen to note however that this exception is only applicable if the claimant’s services had been rendered at the request of the defendant, in this case, if Lampleigh securing a pardon for Braithwait was in fact requested for by Braithwait, and that it was implied that the said services were to be paid for.
In all honesty, therefore, the decision of Re McArdle would have been different had that been a business transaction or in a manner of speaking a commercial one, for an implied promise to pay would have been found by the court.
An example of such a finding can be seen in the case of Re Casey’s Patents[17],
where there were joint owners of certain patent rights who wrote to the plaintiff, ‘In consideration of your services as the practical manager in working our patents, we hereby agree to give you a one-third share of the patents.’
It was contended by the defendants that the promise was made in respect of the plaintiff’s past services and therefore the plaintiff could not enforce the promise against them because he himself had supplied no consideration for it.
Bowen LJ found for the plaintiff, stating that there was an implied promise that the plaintiff’s services would be paid for and that the share of the patents would be regarded as such payment, despite the lack of a previous request by the defendants for the plaintiff to supply his services.
Lord Scarman in Pao On v Lau Yiu Long reaffirmed the principle in Lampleigh v
Braithwait when he stated that and I quote,
“An act done before the giving of a promise to make a payment or to confer some other benefit can sometimes be a consideration for the promise.
The act must have been done at the promisor’s request, the parties must have understood that the act was to be remunerated further by a payment or the conferment of some other benefit and payment, or the conferment of a benefit must have been legally enforceable had it been promised in advance.”[18]
In the Ugandan commercial sense, business, bargaining and commercial or contractual relations aren't so novel and do not so much as stick to the textbooks or protocol.
Case in point, if Oluka makes a trip to the mechanic to repair his car and before the service is actually rendered, there is no mention of price whatsoever, and the promise is made way after the service is done, doesn’t this fall solely in the definition of past consideration? Can the mechanic therefore enforce Oluka’s promise in the Contract?
In my understanding, though the principle in Lampleigh v Braithwait is classified as an exception, doesn’t it just merely reflect the normal requirement for consideration, because certainly, the mechanic did not work on Oluka’s car for free, he would have to be paid, it is just normal commercial practice not so much so an exception to the past consideration rule. What do you think?
After understanding that past consideration is no consideration of course subject to exceptions notably in Lampleigh v Braithwait,
Let's now discuss executed and executory consideration which are of course valid forms of consideration.
Executory consideration is where something is to be done in the future after the contract has been formed.
Executory consideration exists when the contracting parties make promises to each other because they are promising something for the future when thought of in terms of a contract for the sale of goods, this is typically an agreement to sell as defined by the Sale of Goods Act[19] after the contract has been made – on making the contract you promise to deliver some goods to me and I promise to pay for them when they arrive, for example. A bilateral contract usually involves executory consideration.
Executed consideration is where at the time of the formation of the contract the consideration has already been performed.
If I promise to give 20K to anyone who finds my lost handbag, returning the bag is both acceptance of my offer (and thus the time when the contract is formed) and executed consideration for my promise. Executed consideration usually occurs in unilateral contracts.
2. Consideration must move from the promisee
Consideration must move from the promisee but not necessarily to the promisor. This rule basically asserts that the promisee and not a third party should provide consideration for the promise so as to be able to enforce the contract.
An illustration of this rule can be as follows, In Price v Easton[20], a man was indebted to Price for the sum of 13 pounds. He offered to work for Easton who would in return discharge his debt to Price. The debtor fully worked as agreed but Easton did not clear the debt to Price, who then sued Easton. Lord Denman held that the plaintiff had to show
‘consideration for the promise moving from him to the defendant’.
This certainly hints at the doctrine of privity of contract that restricts a 3rd party from enforcing a contract, one reason being the said 3rd party provided no consideration necessitating enforcement of contractual terms.[21]
In Tweddle v Atkinson[22], the plaintiff’s father and prospective father-in-law agreed with each other that they would pay the plaintiff 100 pounds and 200 pounds respectively in consideration of the plaintiff’s intended marriage and confirmed that agreement in writing after the marriage. The father-in-law died before he paid his 200 pounds and the plaintiff sued the executors to recover the money. Wightman J held that the plaintiff’s action would fail since he had not furnished any consideration. As a stranger to the contract, he could not take advantage of it, even though it was made for his benefit.[23]
This rule does not, in addition, necessarily mean that the consideration should flow to the promisor[24], it may be for the benefit of a third party at the promisor’s request[25] for example, Ann promises to pay Ben to give Ann’s daughter driving lessons, Ben will be able to enforce this promise; although he has given no direct benefit to Ann, he has suffered some detriment in that he has provided the lessons, which in itself is valid consideration for an enforceable contract.
This is certainly well illustrated in the case of Bolton v. Madden.29
This rule taken at face value might suggest that for consideration to be in fact sufficient, the promisee has to lose something or there must be a detriment to said promisee, but Treitel seems to suggest that this isn't the case and that a benefit to the promisor is sufficient without any detriment to the promisee.30
Treitel suggests that this is so if the promisee confers a benefit on the promisor, or on a third party at the promisor's request.
This is illustrated by Treitel illustrates using, Bolton v Madden31 where the claimant and defendant were entitled, as subscribers to a charity, to vote on the disposition of its funds. The claimant promised to vote at one meeting for a person whom the defendant wished to benefit, and the defendant promised in return to vote at the next meeting for a person whom the claimant wished to benefit. In an action on the defendant's promise, it was argued that there was no consideration for it as the claimant.
But it was held that consideration had moved from the claimant when he had at the defendant's request conferred a benefit on a third party.
Consideration must be sufficient but not necessarily adequate.
Adequacy or sufficiency? Can a Bic Pen be considered enough for a Jeep Grand Cherokee?
It is now settled Law that the courts will not make a comparative economic evaluation of the consideration preferred by each party to the contract.
The courts seek merely to establish that the consideration has a degree of economic value and do not inquire into the relative values of the consideration contained in the contract.[26] The reason for this rule is the old idea of freedom of contract, which required that the parties themselves should be allowed to make the bargains that suit them, without interference from the courts.[27]
Frankly speaking, the courts are less concerned about your bargaining skills or what you would consider valuable in the circumstances, well if we are to negate any prospect of Fraud, duress or undue influence.
The question is therefore solely whether both items considered must have any economic value.
For illustration, In Chappell & Co. Ltd v Nestlé Co. Ltd 34,
The plaintiffs owned the copyright to a piece of music entitled ‘Rockin’ Shoes’. X made records of the tune which they sold to Nestlé, the defendants, for 4d each, who then offered them to the public for 1s 6d each plus three wrappers from Nestlé 6d chocolate bars. The wrappers were thrown away on receipt.
The main object of Nestlé Ltd was to promote and sell their chocolate, though a profit was also made on the sale of the records.
The plaintiffs sued the defendants for breach of copyright, relying on s 8 of the Copyright Act 1956 which provided that a person can make a record of a musical work provided it is designed for retail sale and royalties of 61/4 percent ‘of the ordinary retail selling price’ were paid to the owner of the copyright.
The defendants based their royalty fee on 1s 6d and the plaintiffs refused this on the basis that the money consideration was only part of the price and that the wrappers should also be taken into account in assessing the royalty fee. It was held that judgment should be given to the plaintiffs since the wrappers were certainly part of the consideration in that they represented an economic value, albeit one that might be very small. Lord Somervill stated:
“A contracting party can stipulate for what consideration he chooses. A peppercorn does not cease to be good consideration if it is established that the promisee does not like pepper and will throw away the corn.”
So back to the question, Can a Bic pen be considered enough for a Grand Cherokee?
A modern application of the rule can be seen in the case of Midland Bank Trust Co. Ltd v Green[28] where a father, to avoid an option granted to his son, sold a farm to his wife for £500 even though it was valued at more than £40,000. In the Court of Appeal,
it was held that a sale at such an undervalued price could not amount to a sale for ‘money or money’s worth’.
The House of Lords reversed the decision, stating that the court would not inquire into the adequacy as long as the consideration was real. There was thus a good contract between the parties.
So back to the Bic Pen and Grand Cherokee, well that would depend on how you answer whether a Bic Pen has any economic value attached to it.
In my opinion, it does and therefore Midland Bank Trust Co. Ltd v Green would be the authority of choice to state that such consideration is real and its adequacy is irrelevant!
What about sufficiency?
The consideration, in addition to amounting to an economic value, must be of a type recognised by law.
Where a person promises to do something that they are already bound to do because the law has imposed that obligation on them, then that promise does not furnish sufficient consideration to support a simple contract.
Merely repeating an obligation already imposed on a promisee amounts to a promise to do nothing at all. The situations where the law finds the consideration to be insufficient fall into two principal categories:
1. where there is a performance of an existing obligation, and
2. where there is a promise to pay part of a debt[29]
3. Performance Of an existing Obligation
Existing Obligations may be contractual, or public duties, let us discuss contractual duties first. The position of the Law here is unclear and has changed over-time.
Previously Stilk v Myrick provided the that performance of an existing duty wasn’t sufficient consideration. This is the general rule.
In Stilk v Myrick[30] two sailors deserted a ship during a voyage and the captain was unable to find replacements for them.
The eight remaining crew members were promised extra wages for sailing the ship back home shorthanded, but when they arrived back in London, the captain refused to pay the extra money.
The sailors sued for it, but the court held that there was no consideration for the captain’s promise; the sailors had already contracted to sail to their destination and back, and that was all they had done.
This case should be contrasted with the case of Hartley v Ponsonby[31] where half the crew deserted a ship, and the rest were promised extra money to carry on working the ship to Bombay. Again, at the end of the voyage, the captain refused to pay the extra money and the plaintiff sued.
In this case, the court held that there was consideration, because the crew had become so small that the remainder of the voyage was more dangerous than it had been when they made their contracts. In agreeing to carry on, the plaintiff was taking on duties beyond those in his original contract and had therefore provided consideration for the promise to pay extra.
This is confusing because prima facie these cases are identical but the decisions are different of course the ratio decidendi in Hartley v Ponsonby is understandable, the crew agreed to take up more work than they bargained for remember the consideration is basically a bargain and the court in the Hartley case certainly got it right in my opinion.
Similar to this, the case of Glassbrook Bros v Glamorgan County Council[32] can perhaps offer a more elaborate explanation. What happened in this case was During a strike a pit owner asked for extra protection from the police and promised a payment in return. When the strike was over the pit owner refused to pay, claiming that the police were in any case bound to protect his pit. His argument failed. The police had provided more men than they would normally have done, so there was consideration for the promise.[33]
A very recent exception to the basic rule occurs where the party making the promise to pay extra receives an extra benefit from the other party’s agreement to complete what (s)he was already bound to do under an existing arrangement.
This was in Williams v Roffey Bros & Nicholls Contractors Ltd41
The facts are that Roffey Bros builders subcontracted the carpentry on a number of flats they were building to Williams for £20,000. Williams had been under-quoted for the work and ran into financial difficulties.
Because there was a delay clause in Roffeys’ building, meaning they would have to pay money to the client if the flats were not built on time, they promised to pay Williams another £10,300 if he would complete the carpentry on time.
When Williams completed the work and Roffeys failed to pay extra, his claim to the money succeeded. Even though Williams was only doing what he was already contractually bound to do, Roffeys were gaining the extra benefit of not having to pay the money for the delay to the client.
Williams was providing consideration for their promise to pay him more for the work merely by completing his existing obligations on time.
What is clear from the case is that the courts do not want promises made in a business context to be broken. To prevent this they will find consideration even though we may find it hard to find anything real or tangible about it.[34]
Promise to pay part of a debt.
The basic rule is such that payment of a smaller sum will not discharge the duty to pay a higher sum.[35]
In Pinnel’s Case[36]Pinnel sued Cole for £8 10s, which Cole owed on a bond (a promise under seal to pay money). The debt had become due on 11 November. Cole argued that at Pinnel’s request, he had given him £5 2s 6d on 1 October, which Pinnel had accepted in full settlement of the debt.
Pinnel actually won the case on a technicality, but the court made it clear that had it not been for that technicality, they would have found in favor of Cole, because of the fact that he had made payment earlier than the due date, and this amounted to fresh consideration for the promise to accept less than the full amount.
The court stated:
‘Payment of a lesser sum on the day in satisfaction of a greater cannot be any satisfaction for the whole but a change in time or mode of payment, or the addition by the debtor of a tomtit, or canary or the like will suffice to constitute consideration for the [creditor’s promise to forgo his debt].’
In other words, if the debtor pays early, or in a more convenient place, or gives something else as well as the part-payment, the creditor is receiving some benefit and the debtor some detriment, and this is a fresh consideration for the creditor’s new promise to accept partpayment and not insist on getting the whole amount.
The rule in Pinnel’s case was confirmed by the House of Lords in Foakes v Beer[37].
Dr Foakes was indebted to Mrs Beer on a judgment sum of £2,090.
It was agreed by Mrs Beer that if Foakes paid her £500 in cash and the balance of £1,590 in instalments, she would not take ‘any proceedings whatsoever’ on the judgment. Foakes paid the money exactly as requested, but Mrs Beer then proceeded to claim an additional £360 as interest on the judgment debt.
Foakes refused and when sued, pleaded that his duty to pay interest had been discharged by the promise not to sue. Their Lordships deferred as to whether, on its true construction, the agreement merely gave Foakes time to pay or was intended to cover interest as well.
But they held, even on the latter construction, there was no consideration for the promise and that Foakes was still bound to pay the additional sum.
CONCLUSION
Is the doctrine of consideration adequate as a test for enforceability?
Should promises be enforceable in law?
Charles Fried seems to believe so.[38] Of course, if someone decides to promise to do something for another out of free will and decision, as Jean-Paul Satre puts it, out of an Authentic decision, shouldn’t the Law be able to prevent the said person from failing to perform?
Charles Fried argues that,
“An individual is morally bound to keep his promises because he has intentionally invoked a convention whose function is to give grounds – moral grounds – for another to expect the promised performance. To renege is to abuse a confidence that he was free to invite or not, and which he intentionally did invite.” Employing Kantian Ethics,
Let me add to Fried’s argument, the Categorical Imperative certainly suggests that we are to do acts that we think and would be comfortable with the whole world doing and that humans are ends in themselves and shouldn’t be used as mere means to an end,
I believe in this argument and certainly believe it should be applied in this area of contract Law.
Why should Consideration limit enforcement of a promise made by the free will of a person of sound mind and contractual capacity, in my opinion, courts should develop a more reasoned approach to enforceability of contracts with a work-around the doctrine of consideration because in my considered opinion, people who decide to make promises should be held to those promises and most definitely should perform those process even without the requirement of consideration. Gratuitous promises should also be capable of enforcement all things considered.
This argument considerably shifts the focus to the intention of the parties rather than consideration being the main element for the enforcement of contracts.
The idea of a law of contract focused on intention as the primary test of enforceability, rather than consideration or reliance is a possible one.
The intention of a party to be bound by a contract is to be understood from the party’s statements or conduct as they were reasonably understood by the other party. The focus will be on what was meant by the parties’ words and actions, but it seems likely that whether there was mutuality in the agreement, and whether one party relied on the other will become relevant in deciding whether they implied an intention to make a binding contract.
The intention of the parties will be the central issue, and the approach should avoid some of the formal rigidity of the traditional ‘consideration-based’ focus of the common law, but it will not increase certainty, and it will not be likely to make the job of the courts any easier.
By Edgar Okitoi
For any inquiries
egokitoi@gmail.com @egokitoi +256777177453 School Of Law, Uganda Christian University, UG- Mukono
[1993] 1 Lloyd's Rep. 509 at 522 (payments made by the charterer to crew regarded as consideration for the promise by the shipowner to charterer).
29 Bolton v. Madden (1873) LR 9 QB 55
30 SIR GUENTER TREITEL The Law of Contract, 2003 Eleventh Edition, Sweet and Maxwell, P. 82 31 Bolton v. Madden (1873) LR 9 QB 55 [1] Sir Jack Beatson, Andrew Burrows, John Cartwright, ANSON law of contract,2010 29th Edition, Oxford University Press p91 [2] S,2 Contracts Act 2010, Act 7 of 2010 [3] Currie v Misa (1875) LR 10 Ex 153, 162 [4] Sir Jack Beatson, Andrew Burrows, John Cartwright, ANSON law of contract,2010 29th Edition, Oxford University Press p91 [5] SIR GUENTER TREITEL The Law of Contract, 2003 Eleventh Edition, Sweet and Maxwell, P. 67 [6] Rann v Hughes (1778) 7 T.R. 350 n [7] SIR GUENTER TREITEL The Law of Contract, 2003 Eleventh Edition, Sweet and Maxwell, P. 67 [8] Ben Kiromba Twinomugisha, Principles Of Contract Law in Uganda, 2018 Makerere University Printery, P. 41 [9] Sir Frederick Pollock (1950) in Principles of Contract [10] Dunlop Pneumatic Tyre Co. Ltd v Selfridge and Co. Ltd [1915] AC 847 [11] S2 Contracts Act 2010, Act 7 of 2010 [12] Paul Richards, Law Of Contract,2009 Ninth Edition, Pearson Longman p.60 [13] SIR GUENTER TREITEL The Law of Contract, 2003 Eleventh Edition, Sweet and Maxwell, P. 83 [14] Dent v Bennett (1839) 4 [15] cf Simpson v John Reynolds [19751 1 W.L.R. 617 16 Murray v Goodhews [ 1978| 1 W.L.R. 489 17 Re McArdle [1951]Ch. 669. [16] Paul Richards, Law Of Contract,2009 Ninth Edition, Pearson Longman,p61 19 Lampleigh v Braithwait (1615) Hob 105 [17] Re Casey’s Patents [1892]1 Ch 104 [18] Pao On v Lau Yiu Long [1979] 3 All ER 65 [19] S2 Sale of Goods Act, CAP 82 [20] Price v Easton (1833) 4 B. & Ad. 433 [21] Ben Kiromba Twinomugisha, Principles Of Contract Law in Uganda, 2018 Makerere University Printery, P. 44 [22] Tweddle v Atkinson (1861) 1 B & S 393 [23] More on privity doctrine, see also National Social Security Fund v. Alcon International; SCCA No. 15 of 2009; ZTE v Uganda Telecom, HCCS No. 169 of 2013; Kiga Lane Hotel Ltd v Uganda Electricity Distribution Co. Ltd, HCCS No. 557 of 2004; Ecumenical Church Loan Fund v John Bwiza & Others, HCCS No. 614 of 2004; Francis Xavier Muhozi v National Bank of Commerce(U) Ltd, HCCS No. 303 of 2006. [24] Re Wyvern Developments Ltd [1974] 1 W.L.R. 1097; cf. Barclays Bank pic v Weeks, Lew & Dean |1998| 3 All E.R. 213 at 220-221. [25] See International Petroleum Refining Supply Ltd v Caleb Brett (5 Son Ltd [ 1980] 1 Lloyd's Rep. 569 at 594 (where the promisor benefited indirectly since promisor and third party were associated companies); cf also The Chemical Venture [26] Paul Richards, Law Of Contract,2009 Ninth Edition, Pearson Longman p65 [27] Catherine Elliott and Frances Quinn, Contract Law,2009 seventh Edition,Pearson Longman p93 34 Chappell & Co. Ltd v Nestlé Co. Ltd [1960] AC 87 [28] Midland Bank Trust Co. Ltd v Green [1981] AC 513 [29] Paul Richards, Law Of Contract,2009 Ninth Edition, Pearson Longman p66 [30] Stilk v Myrick (1809) [31] Hartley v Ponsonby (1857) [32] Glassbrook Bros v Glamorgan County Council (1925) [33] See also Shadwell v Shadwell (1860)-The court held that even though the claimant was legally bound to marry, doing so was good consideration for the uncle’s promise and the promise was enforceable.; Scotson v Pegg (1861) - the performance of a duty owed to a third party could in fact provide consideration for a promise made by a third party 41 Williams v Roffey Bros & Nicholls Contractors Ltd (1990) [34] The New Zealand Court of Appeal has taken a different and simpler approach. In Antons Trawling Co Ltd v Smith (2003) the court held that where the parties merely vary the terms of an existing agreement they should be bound by the variation. [35] Exceptions to said rule; Accord and Satisfaction; The doctrine of promissory Estoppel – see Central London Property Trust Ltd v High Trees House Ltd (1947), Combe v Combe (19510, [36] Pinnel’s Case (1602) [37] Foakes v Beer (1884) [38] See Fried, 1981. For an argument for the enforcement of gratuitous promises based on an economic analysis, s
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